August 24, 2012

In a prior blog post, S2KM summarized the appellate brief filed August 17, 2012 on behalf of 18 structured settlement shortfall payees (objector/appellants) who are appealing the Executive Life Insurance Company of New York (ELNY) liquidation plan and restructuring agreement approved by New York Supreme Court Judge John M. Galasso on April 16, 2012.

This blog post provides a more detailed summary of due process allegations contained in the objectors' appellate brief. For additional related background information, see also "The ELNY Due Process Issue".

Due process, according to authorities cited in the objectors' appellate brief, requires:

At a minimum, notice and an opportunity to be heard before a person is deprived of a property interest; and

Balancing
(1) the interests of the parties to the dispute; (2) the adequacy of
the contested procedures to protect those interests; and (3) the
government’s stake in the outcome.

The objecting ELNY shortfall payees allege they were denied due process because the procedures afforded the ELNY shortfall payees were unfair and prejudicial. More specifically they allege:

The notices sent to the ELNY shortfall payees were inadequate and misleading.

Although
the ELNY shortfall victims had a substantial interest in the ELNY
liquidation hearing, they were not parties to the proceeding. They were
never served with any petitions, orders, or filings.

Instead,
Supreme Court Judge John M. Galasso permitted the New York
Superintendent of Financial Services (Superintendent), as Receiver
(Receiver), to send a single letter of notification.

The letters were sent from a Minnesota address and had an outward appearance of junk mail.

Hundreds of notices were returned undelivered presumably because the Receiver's records were outdated.

Many ELNY shortfall payees received their notices during the December holidays.

The
notice was difficult for non-lawyers to understand and many shortfall
payees experienced difficulty finding qualified legal counsel on such
short notice.

The notice was misleading because it
reassured shortfall victims that a $100 million ELNY hardship fund had
been created without fully disclosing limitations related to the
hardship fund.

The objectors were not given adequate time to object to the proposed ELNY liquidation plan ("three weeks for some recipients").

The
notice stated ELNY shortfall payees waived their right to object after a
January 16, 2012 deadline and therefore served to dissuade potential
objectors who concluded they could not comply within the deadline.

Having
imposed these court-endorsed impediments to the objection process,
however, the Superintendent, as ELNY's Receiver, subsequently cited the
low number of objections received (130 objections out of 1,456 affected
shortfall payees) as evidence that the proposed ELNY liquidation and
restructuring plan was fair.

The time allowed for ELNY
shortfall payees to prepare for the ELNY liquidation hearing, and their
lack of access to information, were unreasonable.

1991 -
ELNY enters rehabilitation and its plan for rehabilitation is
subsequently court approved in 1992. Neither the 1991 ELNY
rehabilitation order nor the 1992 order approving the ELNY
rehabilitation plan declared ELNY to be insolvent. The Superintendent
and his agent, the New York Liquidation Bureau (NYLB), as ELNY's
Receiver, have managed ELNY's business continuously from 1991 to the
present.

2002 - ELNY's unpublished and
unaudited financial statements, obtained by attorney Peter Bickford as a
result of Freedom of Information Law requests, show that ELNY's surplus
turned into a deficit in 2002.

2007 - New York Governor Eliot Spitzer announces an "agreement in principle"
for ELNY designed to continue paying all ELNY annuitants 100% of their
benefits. The announced plan, however, whereby various insurers and
guarantee associations agree to pay $650 to $750 million to fund
approximately $2 billion of future ELNY payments, never materializes.

2009
- Audited financial statements indicate ELNY has a deficit in excess of
$1.5 billion. The National Organization of Life and Health Guaranty
Associations (NOLHGA) estimates the majority of ELNY's guaranty
association costs (e.g. 66-75%) will likely be borne by New York's two
life insurance guaranty associations and that 20-30 state guaranty
associations may eventually participate in a final ELNY liquidation
plan.

2010 - A New York State Supreme Court
Judge orders the Superintendent to present the Court with a proposed
order and plan of liquidation for ELNY which the Superintendent
eventually files with the court on September 1, 2011.

December 7, 2011
- The NYLB, acting as the Superintendent's agent, mails letters to
individual ELNY annuity payees notifying them for the first time about
the proposed ELNY liquidation and Restructuring Agreement and alerting
them of anticipated shortfalls for specific ELNY annuity contracts.

January 16, 2012 - deadline for ELNY liquidation Answering Papers (objections) to be served on the Superintendent in response to the petition.

March 15-30, 2012
- hearing before Judge Galasso of the New York State Supreme Court to
consider the Superintendent's Petition for an Order of Liquidation and
Approval of a Restructuring Agreement for ELNY.

Although
the Superintendent (and his agents), as Receiver, spent years preparing
for the ELNY liquidation and restructuring plan, the Superintendent
provided ELNY shortfall payees with inadequate time to: 1) review and
comprehend their complicated legal dilemma and proposed ELNY
restructuring plan; 2) find an attorney qualified and willing to
represent their interests; and 3) prepare a response.

Had the
ELNY shortfall payees been given adequate notice (at least as early as
2010), they could have begun taking steps to protect themselves. For
example: they could have: 1) sought counsel; 2) pooled resources to hire
consultants; 3) exercised their rights as annuity payees; 4) made
appropriate demands on the Receiver; and 5) offered a meaningful
response at the Order to Show Cause hearing.

Despite requests
and objections, the Superintendent, as Receiver, withheld material
information from the shortfall payees and their attorneys. Without these
documents, attorneys for the shortfall payees were not able to verify
and/or effectively question the assumptions or conclusions of the
Receiver’s expert.

Conversely, years prior to the ELNY
liquidation hearing, the Superintendent not only notified NOLHGA and
various insurance companies about the pending ELNY liquidation, he also
shared documents with them and invited and accepted their input into the
drafting of the proposed ELNY liquidation plan.

However, when
attorneys for the shortfall payees sought to submit their own
alternative liquidation and restructuring plan for comparison, both the
Receiver and Judge Galasso refused their input - with the Receiver
repeatedly citing the absence of an alternative plan as evidence that
his plan was viable and fair.

Despite
objections, Judge Galasso permitted the Superintendent, as Receiver, to
establish critical components of its case through hearsay and
speculative testimony.

As one example, Judge Galasso characterized as a "gun to my head"
repeated threats by attorneys representing the Superintendent, as
Receiver, and NOLHGA that voluntary contributions from insurance
companies for an ELNY hardship fund would "go out the door" if
Judge Galasso refused to approve the Superintendent's plan. This threat,
however, was completely unsupported by admissible evidence and one of
the Superintendent's own witnesses admitted such predictions were
speculative.

In addition, Judge Galasso permitted the
Superintendent's attorneys to admit into evidence binders of exhibits
never served on the payees as well as a revised version of the
Superintendent's restructuring plan not filed until March 6, 2012, less
than 10 days before the hearing and more than six weeks after the
objection period had ended.

By comparison, Judge Galasso
repeatedly denied requests by attorneys for the ELNY shortfall payees
for documents which the Superintendent had shared with NOLHGA and
various insurance companies and their counsel.

There was no justification for Judge Galasso to allow the Superintendent and his attorneys to play "hide the ball"
- refusing to share documents with shortfall payees to whom the
Superintendent, as Receiver, owed an affirmative duty of disclosure
while sharing those same documents with other parties including NOLHGA,
various insurance companies and their attorneys.

September
7, 2012 is the deadline for the Superintendent (Respondent), as
Receiver, to serve and file his appellate brief. NOLHGA has
requested and is expected to file its own appellate brief. For S2KM's
complete and continuing ELNY liquidation reporting, see the structured settlement wiki.

August 22, 2012

﻿﻿﻿﻿Approximately 1456 Executive Life Insurance Company of New York
(ELNY) shortfall victims, who collectively anticipate a $920 million
present value loss under the proposed ELNY liquidation plan and
restructuring agreement approved by New York Supreme Court Judge John
Galasso on April 16, 2012, were denied their constitutional rights to
due process according to an appeal filed August 17, 2012 with the
Appellate Division (Second Department) of the New York Supreme Court.

The appeal, filed by attorney Edward Stone and the Christensen & Jensen
law firm on behalf of 18 of the shortfall victims (objectors), also
alleges Judge Galasso erred in granting immunity and injunctive
protection to the New York Superintendent of Financial Services
(Superintendent) in his capacity as ELNY's receiver (Receiver).

The
objectors' appellate brief requests the appellate court to reverse the
ELNY liquidation order in its entirety or, in the alternative, to
reverse the paragraphs granting immunity and injunctive relief to the
Superintendent and his agents including the New York Liquidation Bureau
(NYLB).

Due Process

The appellate brief alleges
the objecting ELNY shortfall victims were denied their due process to a
fair hearing because of a lack of reasonable notice and necessary
information and the selective application of civil practice law and
rules.

Due process, according to authorities cited in the objectors' appellate brief, requires:

At a minimum, notice and an opportunity to be heard before a person is deprived of a property interest; and

Balancing
(1) the interests of the parties to the dispute; (2) the adequacy of
the contested procedures to protect those interests; and (3) the
government’s stake in the outcome.

Looking first at the interests of the parties to the dispute, the objectors maintain:

The shortfall payees have a "substantial interest"
in a fair hearing because of: 1) their anticipated shortfalls and
related financial and medical hardships; 2) their concerns about the
future management of their remaining ELNY assets under a viable plan;
and 3) their concerns that the Superintendent, whom they allege was
responsible for their ELNY shortfalls, will continue to exercise
supervisory responsibilities under the proposed ELNY restructuring plan.

When acting in their capacity as receiver, the Superintendent and the NYLB
are not acting as government agencies. Their interests are limited to
protecting the policyholders, creditors, and the public including the
ELNY shortfall payees. Their interests in a fair hearing should be
extremely high - the same as the shortfall payees. Conversely, the
burden of a fair hearing on the Superintendent and the NYLB would have
been minimal.

The government also has a high
interest in a fair ELNY hearing in order to protect the integrity of the
statutory receivership system as well as the financial well-being of
1456 individuals some of whom could become public charges as a result of
their ELNY benefit reductions.

The ELNY shortfall victims were denied due process, according to the objectors, because the procedures afforded the ELNY shortfall victims were unfair and prejudicial:

The notices were inadequate and misleading.

The time allowed, and the lack of access to information, were unreasonable.

The objectors allege
Judge Galasso and the ELNY liquidation court lacked subject matter
jurisdiction and otherwise erred in granting judicial immunity to the
Superintendent (along with his employees, agents and attorneys), acting
as ELNY's receiver, in their personal capacities because:

The
New York Supreme Court, as a liquidation court, does not have
jurisdiction under Article 74 of the New York insurance statute to
prospectively adjudicate claims or issue orders not involving ELNY's
assets. Claims against the Superintendent, as Receiver, or others in
their personal capacities are not claims against the ELNY estate.

The
scope of the ELNY Liquidation Order’s immunity provision is unsupported
by and unprecedented under New York law which provides immunity for
acts taken “in good faith” and "with appropriate care and prudence.”
Conversely, the ELNY liquidation order confers immunity for virtually
every act or omission the Superintendent has ever undertaken, whether in
an official or personal capacity, or whether in bad faith or violation
of a court order.

Permanent Injunctive Relief

The objectors allege
Judge Galasso and the ELNY liquidation court lacked jurisdiction and
otherwise erred in granting permanent injunctive relief to the
Superintendent (along with his employees, agents and attorneys), acting
as ELNY's receiver, in their personal capacities because:

The
injunction provision of Article 74 of New York's insurance law applies
to an action against the insurer (ELNY) or the insurer's assets not to
an action against the Superintendent, as ELNY receiver, in his personal
capacity.

A receiver is judicially immune from liability
if he acts in good faith and with appropriate care and prudence. Therefore, the
only actions effectively enjoined by Judge Galasso's
liquidation order are actions where the Superintendent, as ELNY's
receiver, breached his fiduciary or other duties.

The Superintendent did not offer any evidence that his property rights would be irreparably harmed absent the injunction.

Briefing Schedule and Additional ELNY Reporting

As
reported in S2KM's recent ELNY Update, the Superintendent, as ELNY
Receiver and Respondent, and attorney Stone, on behalf of
Appellant/Objectors, have jointly agreed and requested calendar
preference and an accelerated briefing schedule for this Appeal:

September 7, 2012 - deadline for Respondent's brief to be served and filed.

September 14, 2012 - deadline for Appellants'
reply brief, if any, to be served and filed, with oral argument to be set by the Court as soon as
practicable thereafter.

For additional background information about issues addressed in the objectors' appellate brief, see:

August 19, 2012

For the past several years, the National Academy of Elder Law Attorneys (NAELA) has featured "UnPrograms" as part of its educational curriculum. Earlier this week, Patrick Hindert, S2KM's primary blog author and a NAELA member, attended the OhioNAELA 2012 UnProgram as a participant.

What is an UnProgram? NAELA's UnPrograms are moderated group discussions about specific topics. The topics typically are identified in advance and the discussions are informal. The handouts for the NAELA Ohio Chapter's 2012 UnProgram were limited to: a list of topics; suggested "Ground Rules", and a one-page evaluation form.

Compared with traditional conference lectures and panels, NAELA's UnProgram discussions are informal and encourage participation by all attendees.The discussions frequently focus on practice issues or actualcases and result in the exchange of ideas and best practices.

Based upon S2KM's limited experience with UnPrograms, these discussions seem to work best with less than 15 participants per topic. For larger groups, participants select from among multiple discussions which occur simultaneously and require space planning. Although it helps to have a moderator with specific subject matter expertise, subject matter experts inevitably emerge during the discussions. Individual discussions can vary in time allotments.

The agenda for the Ohio NAELA two day UnProgram featured topics suggested in advance by participants:

Participants are encouraged to be polite and warned not to interrupt other participants.

Participants are encouraged to ask any and all appropriate questions.

Participants can politely decline to answer any questions.

Discussions about fees and other issues that violate anti-trust law are prohibited.

All other ideas are welcome and encouraged.

The moderator is directed to monitor individual input to encourage broad participation.

Break out sessions are suggested if and when a subset of participants want to discuss a specific subtopic or related topic.

When participants become disinterested in a discussion topic, they are encouraged to move to another group.

Groups are not expected to backtrack when new participants are late entering a discussion.

Individual participants are encouraged to continue discussions during breaks and meals.

Although Ohio NAELA's UnProgram organizers did not attempt to integrate Internet use or Internet resources into the 2012 UnProgram, the UnProgram's informal, horizontal format appears well-suited for both synchronous and asynchronous Internet adaptibility. Private wikis with discussion features could prove especially valuable for organizing, capturing and leveraging the considerable knowledge generated by the Ohio NAELA UnProgram.

August 07, 2012

In an August 2, 2012 blog post titled "Uniform Fiduciary Standards Only Half the Story", John Darer offers the following critique of this earlier S2KM blog post: "It's a pity that an otherwise well written blog post by Patrick Hindert about Uniform Fiduciary Standards, unexplainably omits standards for the secondary market."

S2KM's blog post addressed the following issue: "What impact will a new uniform fiduciary standard, being developed by the Securities and Exchange Commission (SEC) as one result of the Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), have upon existing structured settlement and settlement planning business models and practices?"

Without any discussion of the secondary market, S2KM's blog post also highlighted certain traditional primary market structured settlement business practices that fail to meet any fiduciary standard:

By "setting aside the good players", however, John's blog post spotlights existing bad business practices but does not identify or address secondary structured settlement market business standards. What are those secondary market standards - and how do (or should) these standards impact the primary market?

Looking specifically at the "uniform fiduciary standard" (the subject of the S2KM blog post in question), the related secondary market standard is the "best interest" test. There are three sources that establish and/or address this secondary market standard: 1) IRC section 5891; 2) the state structured settlement protection statutes; and 3) judicial interpretations of the "best interest" standard.

IRC Section 5891

IRC section 5891 imposes a 40 percent excise tax on any person who acquires structured settlement payment rights in a factoring transaction. The excise tax, however, does not apply if the transfer is approved in advance in a "qualified order" issued under an applicable state statute by an applicable state court.

IRC section 5891(b)(2) defines a qualified order as “a final order, judgment or decree” that satisfies two requirements: a qualified order must find the transfer of the structured settlement payment rights:

does not contravene:

Any Federal or State statute or

The order of any court or responsible administrative authority; and

Is in the best interest of the payee, taking into account the welfare and support of the payee’s dependents.

State Structured Settlement Protection Acts

Forty-seven states have enacted some form of structured settlement protection act. While the various state SSPAs lack uniformity, most adopt the same terminology and share the same basic legislative scheme as the Model SSPA. Echoing IRC section 5891, the state SSPAs provide that structured settlement payment rights transfers are not effective unless they receive advance court approval. Under each of the state SSPAs, key terms are defined, procedures for obtaining court approval are spelled out, and required notices, disclosures and findings are established.

Although all of the state SSPAs incorporate the "best interest" test, the California statute is the only SSPA that defines best interest. Section 10139.5 (b) of the California Insurance Code lists 15 factors that judges should consider "[w]hen determining whether the proposed transfer should be approved, including whether the transfer is fair, reasonable, and in the payee’s best interest, taking into account the welfare and support of the payee’s dependents" including:

“(1) The reasonable preference and desire of the payee to complete the proposed transaction, taking into account the payee’s age, mental capacity, legal knowledge, and apparent maturity level"; and

“(15) Any other factors or facts that the payee, the transferee, or any other interested party calls to the attention of the reviewing court or that the court determines should be considered in reviewing the transfer.”

Judicial Interpretations

In the absence of a state SSPA "best interest" standard, state courts have applied differing determination standards and have been reluctant to provide their own definitions. For example, here is a statement from a 2003 New York trial court opinion (In re Petition of Settlement Capital Corp.):

"Although the [New York] statute does not define the best interests of the Payee, developing case law and the intent of the statute suggest the Court should consider: (1) the Payee’s age, mental capacity, physical capacity, maturity level, independent income, and ability to support dependents; (2) purpose of the intended use of the funds; (3) potential need for future medical treatment; (4) the financial acumen of the Payee; (5) whether the Payee is in a hardship situation to the extent that he or she is in “dire straits”; (6) the ability of the payee to appreciate financial consequences based on independent legal and financial advice; [and] (7) the timing of the application."

Conclusion

What relevance, if any, therefore, does the secondary structured settlement market "best interest" standard have as primary market stakeholders contemplate the potential impact of a uniform fiduciary standard under the Dodd-Frank legislation?

Neither IRC 5891 nor any of state SSPAs apply their "best interest" test to primary market structured settlement sales. Only four of the state SSPAs (New York, Florida, Massachusetts and Minnesota) establish any primary market sales standards, each requiring certain mandatory written disclosures.

The secondary market "best interest" test, however, does raise important issues for the primary structured settlement markets. Most importantly, If structured settlement transfers are required to be in "the best interest of the payee, taking into account the welfare and support of the payee's dependents", why shouldn't a "best interest" test or fiduciary standard apply to the original structured settlement sale?

Thank you, John Darer, for pointing out the importance of this issue.

For additional discussion and analysis of secondary market business practices and the "best interest" test, see:

August 01, 2012

What impact will a new uniform fiduciary standard, being developed by the Securities and Exchange Commission (SEC) as one result of the Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), have upon existing structured settlement and settlement planning business models and practices?

Dodd-Frank

Among other reforms, Dodd-Frank created the Consumer Financial Protection Bureau (CRPB) and the Federal Insurance Office (FIO). CFPB's central mission is "to make markets for consumer financial products and services work for Americans ....."

In addition to creating the CFPB and the FIO, Dodd-Frank directed the SEC to study the need for a new, uniform, federal fiduciary standard of care for broker-dealers and investment advisers and to apply such a uniform standard if it deemed necessary. The SEC:

Released its fiduciary standard study in January 2011.

Concluded that a uniform standard of care “at least as stringent” as the fiduciary standard currently applied to investment advisors should extend to all brokers, dealers and investment advisors.

Is expected to release its proposed regulation for a uniform fiduciary standard this year.

Historically, brokers, dealers and insurance producers have been held to a "product suitability" standard which is less stringent than a fiduciary standard. As defined at uslegal.com, "[A] fiduciary duty is an obligation to act in the best interest of another party..... A person acting in a fiduciary capacity is held to a high standard of honesty and full disclosure in regard to the client and must not obtain a personal benefit at the expense of the client." (emphasis added)

NAIC Annuity Suitability Regulation

For comparison purposes, the NAIC "Suitability in Annuity Transactions Model Regulation" (Suitability Regulation) provides:"In recommending to a consumer the purchase of an annuity or the exchange of an annuity that results in another insurance transaction or series of insurance transactions, the insurance producer, or the insurer where no producer is involved, shall have reasonable grounds for believing that the recommendation is suitable for the consumer on the basis of the facts disclosed by the consumer as to his or her investments or other insurance products and as to his or her financial situation and needs, including the consumer's suitability information ..." (emphasis added)

The NAIC Suitability Regulation defines "suitability information" to include: age; annual income; financial situation and needs, including financial resources used for the funding of the annuity; financial experience; financial objectives; intended use of the annuity; financial time horizon; existing assets, including investment and life insurance holdings; liquidity needs; liquid net worth; risk tolerance; and tax status.

Significantly for structured settlements, however, the NAIC Suitability Regulation exempts "settlements of or assumptions of liabilities associated with personal injury litigation or any dispute or claim resolution process". By way of explanation, the legislative history of the NAIC Suitability Regulation specifically references "structured settlements" and adds: "[a] regulator pointed out that this type of contract did not generally result from a recommendation by an insurer or producer but agreed that it did not hurt to have the exemption there."

Impact on Insurance Professionals

Although the SEC's anticipated uniform fiduciary standard has received limited publicity within the structured settlement and settlement planning industries, it has generated significant controversy and disagreement among financial planners, broker dealers and life insurance professionals.

A recent article by Brian Anderson titled "Impact of a Universal Fiduciary Standard" looks at the related issues from the perspective of "insurance producers". Part of a series of articles about threats to the independent life insurance distribution channel, Anderson's article includes the following summary of arguments for and against a universal fiduciary standard:

"Proponents of a universal fiduciary standard — including many financial planner and consumer groups — claim consumers who rely on the financial advice of experts are confused by the different standards of care. These consumers are at an information disadvantage, they say, and vulnerable to exploitation by advisors who are not required to make recommendations in the best interest of the customer."

"Opponents of a fiduciary standard — including many life insurance industry trade associations — say a universal fiduciary standard is unnecessary because the current suitability standard is effective. Opponents also say the imposition of a universal fiduciary standard would result in higher costs and reduced choices and service for consumers."

Some life insurance representatives have expressed concern, according to Anderson's article, that the anticipated SEC fiduciary standard could potentially ban commission-based compensation for insurance product sales and thereby destroy the traditional life insurance business model.

Others disagree. Anderson quotes Jill Hoffman, NAIFA assistant vice president of federal government relations, as stating: “The language of Dodd-Frank specifically says that a fiduciary standard can be met, and a person can still receive commissions, and a person can still sell proprietary products. In other words, the language says you cannot violate a fiduciary standard just because you sell proprietary products and get paid commission.”

Blended products - Structured settlement annuities increasingly are paid into trusts that also include financial products.

Multiple licenses - In addition to structured settlement annuities, settlement planners increasingly sell securities as well as multiple life insurance and annuity products.

Competition - To successfully compete in today's economic and legal environment, structured settlement sales persons must adjust upward to match the higher product suitability standards and best business practices of their competitors including settlement planners, financial planners and trustees.

Clients and Stakeholders - As a matter of self-protection as well as consumer protection, many structured settlement clients (defendants; plaintiff attorneys) and stakeholders ( judges; mediators) will increasingly demand higher product and sales standards for injury victims.

Lawsuits - In this era of accountability and compliance, all structured settlement participants are likely to be held to higher legal standards.

What issues might a uniform fiduciary standard create for structured settlement and settlement planning professionals? At their worst, as S2KM has previously observed, certain traditional structured settlement business practices fail to meet any fiduciary standard. For example:

Misrepresentations or omission of material facts

Cost or Value - From a claimant's perspective, a core strategy for traditional structured settlements often appears "to make a little money look like a lot of money". The Spencer v. Hartford class action allegations outline one "sophisticated" variation of this strategy which often depends on hiding or misrepresenting annuity "cost" and/or settlement "value".

Guaranteed payments - Many structured settlement sales brochures continue to promise "guaranteed payments" without specifying who guarantees what if and when an annuity provider like Executive Life of New York (ELNY) becomes insolvent.

Managed account - Many structured settlement recipients do not understand important product details when their case is settled including how structured settlements differ from managed accounts and why they cannot access funds without court approval pursuant to state structured settlement protection acts.

Structured settlement myths- historically used to promote sales such as:

Studies show that nine out of 10 lump sum recipients squander the entire amount within five years.

Structured settlements enable injury victims to live free of reliance on government assistance.

Single product- The danger of single product structured settlement sales persons is not limited to whether his or her product is in the "best interest" of a particular claimant/customer. The danger is also that single product sales persons are inherently conflicted in recommending how much of any settlement should be allocated to their product.

Multiple roles - A structured settlement sales person introduced into a case by a defendant or liability insurer frequently plays four separate roles each of which potentially conflicts with the other roles: agent for the annuity provider; broker for the defendant; broker for the plaintiff; and agent for the defendant in helping to negotiate and settle the case.

Compensation sharing - Unless all parties to a settlement are informed about whether and how structured settlement annuity commissions are shared, a structured settlement creates a variety of potential conflicts of interest.

Funding alternatives - Based upon traditional structured settlement business and compensation models, the potential availability and applicability of 468B qualified settlement funds for "appropriate cases" creates inherent conflicts of interest between defendants and their structured settlement brokers.